8 October 2017
By Samson Berhane
Double-digit inflation keeps threatening the macroeconomic conditions of the country as the headline inflation rate hit 10.8pc last month, according to the Central Statistical Agency (CSA)- the highest since October 2015.
It is in contrary with the target of the government in the second edition of Growth & Transformation Plan (GTP II) to keep inflation in a single digit.
The hike in the price of cereals such as teff, maize, wheat, barley, beans and sorghum coupled with holiday-driven price upsurge is the primary reason for the inflationary pressure last month, keeping the food inflation stagnant around 13pc.
“As September is a time of multiple holidays, it is believed to influence the increase in the inflation rate,” the report of CSA reads.
Bean and maize have seen the highest price increase amongst cereals with a price of 30 Br per kilogram and 12 Br a kilogram, respectively, in the largest cereal market of the capital, commonly known as Ehil Gebeya. The price of cereals has shown a quick rise since February 2017.
Assefa Admassie (PhD), an agricultural economist with three decades of experience, believes such increases are usual during the offseason.
“It is temporary and will surely improve after the harvesting season,” he said.
Salem Abdela, a retailer of cereals at Ehil Gebeya agrees with Assefa.
“The stock of many farmers has depleted by this time as the harvesting season approaches,” said Salem. “I am sure it will stabilise in the months ahead although I doubt the price of maize will decrease.”
In the harvesting season that starts this month, the Ministry of Agriculture & Natural Resources (MoANR) aims to harvest 30 million quintals of maize, even though the Fall Armyworm damaged one-third of the land covered by the crop.
First observed in Yeki wereda in the Southern Nations, Nationalities & People’s Regional State (SNNPR), the government is putting an effort to control of the invasion by the worm across the country through the provision of pesticides.
Two months ago, the government launched a project dubbed “Emergency Response to the New Invasive FAW in Ethiopia” to prevent the invasion. To undertake the project, the government has already trained 277 researchers.
The rise in inflationary rate comes at a time when the country is hit by the third worst drought in three decades, leaving 8.5 million people in critical conditions.
The non-food component of inflation has also shown a significant rise in the past month- reaching 8.1pc- the highest since the beginning of the year. The climb in non-food inflation is chiefly due to the prices of Khat, clothing and footwear.
The rise in inflation is reported a week after the International Monetary Fund (IMF) reported the country’s economy is on the right track. The Fund estimated the growth of the nation at nine percent in the past fiscal year and is projected to reach 7.5pc in 2017/18.
Seven months ago, BMI, a Fitch Group Company and think tank, predicted the inflationary pressure would remain high until the conclusion of the current year due to the low productivity of agriculture, and money supply.
Source – Addis Fortune